December 15, 2017 / 11:46 AM / 9 months ago

UPDATE 1-PSA's Opel to cut workers' hours in restructuring

* Affects engineering, administration from Jan. 1

* Work week shortened to 35 hours from April

* Expansion of part-time programme for older workers

* New common procurement organisation with PSA’s other brands (Adds further details from agreement)

FRANKFURT, Dec 15 (Reuters) - PSA Group’s Opel, under pressure to cut costs, said on Friday that management and staff representatives had reached an agreement that includes shorter hours for its workers.

The Ruesselsheim, Germany-based carmaker said a deal had been struck to, among other things, cut hours for at least six months from Jan. 1 in the engineering and administration departments.

From April 1, the work week will also be shortened to 35 hours for workers who currently have agreements in place to work more, Opel said.

Opel, which operates as Vauxhall in Britain, did not say how many workers would be affected. The loss-making company, which PSA bought from General Motors, earlier this year, employs over 37,000 people, including more than 19,000 in Germany, according to its website.

Opel also said a new common procurement organisation for Opel/Vauxhall with PSA’s other brands, including Peugeot and Citroen, would increase efficiencies.

In the long term, 30 percent of savings from the integration of Opel into PSA will stem from procurement, it said.

“It is our common goal to make Opel competitive,” said Michael Lohscheller, chief executive officer of Opel Automobile.

PSA Group Chief Executive Carlos Tavares had signalled possible cost cuts at Opel, noting in a newspaper interview in October that production costs were at least 50 percent higher than at the group’s French factories.

Tavares has also said a failure of turnaround efforts at Opel would spell “very serious” consequences for workers at the German division and the company as a whole.

PSA has given Opel until 2020 to return to profit as part of a recovery plan aimed at shifting the brand’s model lineup onto PSA’s architecture, with the French parent pursuing 1.7 billion euros ($2 billion) in savings from its purchase of Opel.

Other key elements of the agreement announced on Friday include an expansion of part-time programmes for older employees and the possibility of early retirement.

Managers’ bonuses will be linked to the turnaround plan, Opel said.

$1 = 0.8475 euros Reporting by Tom Sims; Editing by Maria Sheahan and Mark Potter

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